In the last five years, the Striani case has been the main sword of Damocles hanging over UEFA’s Financial Fair Play Regulations. At the very least, the only real judicial threat they have faced (apart from the relatively harmless challenge mounted in the Galatasaray case at the CAS). Indeed, a Belgian player agent, Daniele Striani, represented by Bosman’s former lawyer Jean-Louis Dupont, attempted, in various fora, to challenge the compatibility of UEFA’s CL&FFP Regulations with EU law. Striani lodged a complaint with the European Commission (which was quickly rejected in October 2014) and initiated a private action for damages before the Brussels Court of First Instance. The latter deemed itself not competent to decide on the matter, but nevertheless accepted to order a provisory stay of the enforcement of the UEFA FFP Regulations pending a preliminary reference to the Court of Justice of the EU (see Ben van Rompuy’s blog on the case here). The CJEU unsurprisingly rejected to enter into the matter, but UEFA and Striani decided to appeal the first instance ruling to the Court of Appeal, which rendered its decision on 11 April. It is unclear at this stage whether Striani will attempt to challenge it at the Belgian Cour de Cassation (Highest Civil Court), however this would entail considerable risks and costs and his lawyers to date have not indicated that they would do so (see here). 

While the ruling of the Court of Appeal does not touch upon the much-discussed question of the compatibility of UEFA’s FFP Regulations with EU law (see our many blogs on the question here, here and here), it remains an interesting decision to discuss broader questions related to the procedural ease in challenging regulatory decisions passed by sports governing bodies (SGBs) based in Switzerland. Competition law constitutes the main legal tool available to sports stakeholders looking to challenge existing regulatory arrangements from the outside (e.g. not going through the internal political systems of the SGBs or the CAS route). Recent cases, such as the ISU decision of the European Commission, the Pechstein case in front of the German courts or the Rule 40 decision of the German competition authority, have demonstrated the potency of competition law to question the legality of the rules and decisions of the SGBs.[1] In this regard, the decision of the Brussels Court of Appeal narrows the range of parties allowed to challenge in European courts the SGBs’ rules and decisions on the basis of competition law.

I.               A Strict Interpretation of Article 5(3) of the Lugano Convention 

Striani, supported by a number of fans based in France and the UK (presumably PSG and Manchester City supporters), was challenging the UEFA FFP rules for their indirect effects. In short, the core claim was that the FFP Regulations, by curtailing the ability of clubs to invest on the transfer market, had the effect of depriving Striani from the chance to earn more money for his services as an intermediary and the fans from a chance to see better players join their favorite team and therefore improve the quality of the team’s performance. Undoubtedly, these effects were not primary objectives of the FFP rules, which were aimed at constraining the ability of clubs to invest at a loss. Moreover, the rules were only constraining clubs qualified to the European competitions. The question from the point of view of private international law, was whether Striani and the fans could rely on Article 5(3) Lugano Convention to sue UEFA in front of the the Belgian courts.[2]

The Court of Appeal acknowledged that in this case it was dealing with an action in liability for a breach of competition law but sided with UEFA in considering that the hypothetical damage suffered by the claimants in Belgium was too indirect for it to be competent. It came to this conclusion after a journey through well-known European private international law judgments, such as Mines de Potasse d’Alsace, Dumez France or Shevill, and other less known (mainly French and Belgian) judgments in cases involving Swiss-based SGBs.[3] In the present case, it noted that « the challenged UEFA Regulation does not prohibit M. Striani and MAD Management […] from exercising the activity of an intermediary in Belgium or abroad, nor does it regulate the conditions in which this activity is to be exercised ».[4] Moreover, the targeted provisions « do not prohibit the relevant clubs from having recourse to agents […] nor do they limit this activity ».[5] In fact, the prejudice alleged by Striani and MAD Management « is only an indirect consequence of the adoption of the challenged UEFA Regulation », as « it is not related directly to the activity of the claimants and does not have direct consequences on this activity in Belgium or abroad ».[6] Thus, the Court decided that jurisdictions of the seat of UEFA (the Swiss courts) are sole competent to hear the matter.

This conclusion is not surprising. It was also the one reached by the first instance court, which however still decided quite surprisingly to send a preliminary reference to the CJEU and to order a stay in the enforcement of the UEFA FFP Regulations (the latter move was condemned by the Court of Appeal). Yet, it carries implications in the context of transnational sports regulation. Indeed, this is a domain in which the consumers (e.g. fans) are heavily impacted by decisions taken by international SGBs located mainly in Switzerland. The regulatory decisions of these bodies have undoubtedly structural effects on the way a particular sport is experienced by the fans. Moreover, due to the monopoly positions of the SGBs over their sports, these decisions are rarely challenged by competitors (such as the International Swimming League). They often bind the fans and determine the quality of the competitions they are watching and are doing so without providing them any type of say in the regulatory process. Sure, fans (or agents) will still be able to sue the SGBs in Swiss courts, but those have proven extremely ‘benevolent’ vis-à-vis the SGBs and are unlikely to apply EU competition law. In short, the Belgium court has consolidated the exclusion of actors indirectly affected by the decisions of the SGBs from European courts. What happens in Switzerland stays in Switzerland…

II.              The irresponsibility of the URBSFA for UEFA’s decisions

The second strategy used by Striani’s lawyers to anchor the dispute in Belgium was their attempt to involve the Belgium football federation, URBSFA, in the case. Indeed, as the URBSFA is seated in Belgium, there is no issue with regard to the competence of the Belgium courts in its regard. However, here the problem arises in connection to the URBSFA’s causal contribution to the adoption and enforcement of the challenged UEFA FFP Regulations. Indeed, the court held that « the fact that URBSFA is a member of UEFA does not turn it into a co-author of the regulations; the reasoning of the claimants ignores the separate legal personality of UEFA ».[7] The claimants were also alleging that the URBSFA was contributing to the enforcement of the FIFA rules, yet the court finds that they are « confusing the licensing role conferred to the national federations […] with the specific rules regarding the financial balance of clubs enshrined in Articles 57 to 63 of the attacked regulations ».[8] In fact, the « federal regulations of the URBSFA do not impose any constraints, or sanctions, with regard to the challenged break-even rules; these are of the sole competence of UEFA. »[9] Hence, the court concludes that no particular wrongful conduct can be attributed to the URBSFA linked to the harm alleged by the claimants.

By doing so, the Court of Appeal holds onto the formalist idea of the separate corporate personalities and brushes over the fact that national federations are at least politically co-responsible for the policies adopted, e.g. they hold the voting power inside the international federations. In this context, invoking the corporate veil might let national federations too easily off the hook, even though it is certainly true that a single national federation does not have a decisive voting power or influence inside an international SGB. Here, there is an interesting parallel with the functioning of the European Union itself, as it seems that decisions taken by UEFA (not unlike the EU’s) are not politically (or in this case legally) attributable to the individual member associations (the famous blame Brussels culture). The idea of a joint action between national and international federations leading to the exercise of collective power might be more suitable to capture the transnational regulatory dynamics at play in sports and could lead to some form of joint liability. In any event, this part of the decision highlights another difficulty in anchoring a case outside of Switzerland, as national federations will often be deemed an inadequate defendant due to their relatively passive role in the adoption and enforcement of the regulations of the international SGBs.

Conclusion

Striani’s crusade against UEFA’s FFP Regulations came to a strange end. While legal scholars and practitioners have been discussing at length whether FFP can be deemed compatible with EU law or not (I’ve spoken in favor of compatibility under certain circumstances, but many others have disputed it), the much-awaited ruling did not even touch upon this question. Indeed, the Brussels Court of Appeal simply denied its competence to hear the matter and sentenced the claimants to pay quite high legal fees to UEFA. By doing so, it did not simply put an end to a case that felt quite artificial and which might have been a pawn in a wider game between UEFA and some powerful clubs, it also closed the door on a variety of stakeholders willing to challenge the rules and decisions of SGBs outside of Switzerland. Indeed, if this interpretation of the Lugano Convention were to stand, it would for example exclude fans from being able to launch liability claims, on their home judicial turf, against international SGBs for the damage inflicted to their clubs.

Besides those directly impacted, in the case of FFP primarily the clubs (would the players be sufficiently directly affected? Maybe, maybe not), those that wish to challenge the rules and decisions of the SGBs are condemned to turn to the Swiss courts, which are rather well-known for their deference to the wide regulatory autonomy of international SGBs. In short, what happens in Switzerland (e.g. the adoption and enforcement of the SGBs’ regulations) is to stay judicially in Switzerland. This will be a reassuring news for the network of Swiss private associations that rule over international sports as it will reduce the risk of facing civil litigation outside of their well-chartered home turf. In fact, it is extremely rare for those directly affected (e.g. the clubs and athletes) to be ready to go to court to challenge them. As evidenced by the case of Bosman or Pechstein, the short-term costs in doing so are disproportionately high (boycott and career-end for the former, bankruptcy for the latter) while the chances of success remain quite limited. Similarly, a football club is unlikely to take the risk of going against UEFA or FIFA, unless it has nothing left to lose (e.g. like SV Wilhelmshaven). In sum, even if I believe UEFA’s FFP rules could be allowed to stand under EU law, this ruling sheltered UEFA from having to deal with this question, at least for the time being.

[1] In general, see B. Van Rompuy, The Role of EU Competition Law in Tackling Abuse of Regulatory Power by Sports Associations, Maastricht Journal of European and Comparative Law (2015), vol. 22, nr. 2

[2] Article 5(3) Lugano Convention provides that: A person domiciled in a State bound by this Convention may, in another State bound by this Convention, be sued in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.

[3] See the judgments cited in Cour d’appel Bruxelles, UEFA c. Striani & co, 11 avril 2019, 2015/AR/1282, paras 40 & 41.

[4] « En effet, le Règlement UEFA critiqué n'interdit pas à M. Striani et à MAD Management, qui se présentent comme agent de joueurs de football en Belgique (le premier comme personne physique et la seconde étant la société à travers laquelle le premier exerce son activité), d'exercer cette activité d'agent, en Belgique ou à l'étranger ni ne règle les conditions d'exercice de cette activité. » Ibid, para. 42.

[5] « Par ailleurs, ces dispositions ne font nullement interdiction aux clubs concernés de recourir aux services d'agents, tels les demandeurs originaires, ni ne limitent cette activité. Ibid.

[6] « ll découle de ce qui précède que, sans préjuger de la matérialité du dommage invoqué par M.Striani et MAD Management, ce dommage, à le supposer établi, n'est qu'une suite indirecte du l'adoption du Règlement UEFA querellé. Le Règlement querellé ne concerne pas directement l'activité des demandeurs originaires et n'a pas de conséquence directe sur cette activité, en Belgique ou ailleurs. » Ibid.

[7] « L’URBSFA n'est pas l'auteur des règles d'équilibre financier prévues au Règlement UEFA. Le seul fait que I'URBSFA soit membre de l'UEFA ne la rend pas co-auteur du Règlement; le raisonnement des intimés fait fi de la personnalité juridique distincte de l'UEFA. » Ibid, para. 48.

[8] « Ce faisant, les intimés entretiennent la confusion entre le rôle dévolu aux fédérations nationales pour l'octroi des licences, non critiqué en tant que tel, et les règles particulières concernant l'équilibre financier, prévues aux articles 57 à 63 du Règlement querellé. » Ibid.

[9] « Le Règlement fédéral de l'URBSFA ne comporte dès lors pas d'exigence, ni de sanction, concernant les règles d'équilibre financier querellée; celles-ci sont uniquement du ressort de l'UEFA. » Ibid.